Delegating pricing decisions to the salesforce has been a salient issue for marketing academics and practitioners. We examine this issue in a competitive market using standard agency theory with symmetric and asymmetric information. Under symmetric information we find that the optimal contracts have a nice property that allows managers to reach the upper bound on firms' profit by using either centralized or delegated pricing, and hence there are no incentive-based reasons to prefer centralized versus delegated contract types. Thus, managers can focus on the design of the optimal incentive scheme without worrying about the contract type. Under asymmetric information we find that there always exists an equilibrium where all firms use centralized pricing that is either unique or payoff equivalent to equilibria that have a combination of contract types. These results are robust to a large class of agent and market parameters. However, if restrictions are exogenously imposed on contract form or observability, the above results are no longer true, as in earlier work. We demonstrate our results by providing explicit solutions under the Holmstrom and Milgrom (1987) framework.

Shows that if traders can split orders between market makers, then market makers set less-competitive price schedules that earn them strictly positive profits and hence raise trading costs. Summary of equilibrium outcomes for different numbers of competing market makers; Consideration of the...

We investigate the incentives for investments in capacity in a simple strategic dynamic model with random demand growth. We construct non-collusive Markovian equilibria where the firms' decisions depend on the current capacity stock only. The firms maintain small reserve margins and high market...

Reports on the profitability of Ford Motor Co. in the U.S. Discussion of the business proposal to reduce automobile prices; Focus on the competitiveness in the foreign markets; Demand for wage increase within the manufacturing industries.

The article reveals that declining incentives, increasing sales, and added production at Nissan Motor Corporation's North American operations led to a 22 percent surge in operating profit in the region during the April-June 2014 fiscal first quarter. Trends discussed include Nissan's North...

The interest rate channel of monetary transmission is the link through which variations in Central Bank real interest rates influence aggregate output and prices. To check fluctuation in prices, the Central Bank of Nigeria has kept the monetary policy rate stable at 12 percent for the past three...

The article informs about the economic stability and power of the upstream market. It states that the firm will loose all of its demands on raising its product price even by one penny. It also discusses about the input distortions, commonly known as variable proportions distortion, forms the...